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Big cuts to oil impact grants loom for local agencies, Land Board hears recommendation to cut $140M appropriation by more than half

BISMARCK - A fund that provides grants to local agencies impacted by oil and gas development in western North Dakota is on track to collect less than half of the nearly $140 million that lawmakers appropriated for 2015-17, forcing officials to co...

BISMARCK – A fund that provides grants to local agencies impacted by oil and gas development in western North Dakota is on track to collect less than half of the nearly $140 million that lawmakers appropriated for 2015-17, forcing officials to consider scaling back the program.

Since the two-year budget cycle began July 1, the Board of University and School Lands has awarded about $41.6 million in grants to airports, emergency medical services, K-12 schools, law enforcement agencies, fire districts, local health units, critical access hospitals and service providers for those with developmental disabilities.

However, the Oil and Gas Impact Grant Fund has collected only $21 million because of lower-than-projected oil prices and a corresponding drop in oil production tax revenues.

Grant recipients are funded on a reimbursement basis, so the state still has time to collect the money to meet the existing grant obligations. The five-member board chaired by Gov. Jack Dalrymple heard a recommendation Thursday to revamp the spending plan to award $65.6 million during the two-year budget cycle – less than half of the $139.3 million appropriated.

The board took no action, choosing to revisit the recommendation from Department of Trust Lands Commissioner Lance Gaebe after a new state revenue forecast is released Monday.

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The forecast is expected to trigger automatic budget cuts of 2.5 percent for most state agencies – though some lawmakers are calling for deeper cuts – and force Dalrymple to transfer money from a rainy day fund to cover the remaining revenue shortfall.

Gaebe said he fears the forecast may show that revenues can’t support the $65.6 million.

“I’m afraid our fund may be even more challenged than we had guessed in our worst-case scenario,” he said.

Airports would be the biggest losers under the revised spending plan, with grant funding reduced from $48 million to $8.7 million, while EMS grants would shrink from $6 million to $3.7 million. Nursing homes, K-12 schools, low-producing oil counties, Bowman and Divide counties and the cities of Stanley, Kenmare, Berthold and Burlington each would lose half of their grant money.

“We’re all going to be disappointed, because everybody got their expectations up,” said Senate Majority Leader Rich Wardner, R-Dickinson, who is hoping for a rebound in oil prices to soften the blow. “We just have to accept it is what it is, and we will have to adjust.”

Legislation passed last session mandates that certain grants be awarded, including $250,000 for sexual assault nurse examiner (SANE) programs, $750,000 for prevention and treatment services related to human trafficking victims and $10 million for critical access hospitals, half of which was distributed this month.

Board members voted unanimously Thursday to approve $247,767 for SANE programs in Bismarck, Grafton, Grand Forks, Jamestown, Stanton and Williston and $655,424 for human trafficking treatment and support services in Bismarck, Minot and Williston.

They delayed action on $2 million in non-mandatory grants for domestic violence shelters until after the new forecast comes out.

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“I think it makes sense to see what happens Monday,” Attorney General Wayne Stenehjem said.

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